NEW YORK — Woes worsened Thursday for Tommy Hilfiger Corp. as its shares hit a 52-week low after the apparel firm was slapped with multiple shareholder lawsuits stemming from a federal criminal investigation of the Tommy Hilfiger U.S.A. subsidiary.

At least five shareholder lawsuits seeking class-actions status were filed in a Manhattan federal court between Tuesday and Wednesday.

The lawsuits follow the disclosure last Friday by the Tommy subsidiary that it received a grand jury subpoena for documents relating to the commission rate it paid to a non-U.S. subsidiary.

Wall Street has since speculated that the probe by the U.S. Attorney’s office in Manhattan centers on tax-related issues. The allegations in the shareholder lawsuits echo this theory.

Executives at Tommy, however, declined comment for this story, and have provided no information about the specifics of the investigation. The probe, while criminal in nature, is still in the investigative stage, and no indictments have been issued yet against any individual or entity. And while there has been speculation by Wall Street that the company might be liable for back taxes, there is no information from either Tommy executives or the U.S. Attorney’s office confirming those theories.

Each investor lawsuit is seeking class-action status on behalf of shareholders who bought Tommy stock between Nov. 3, 1999 and Sept. 24, 2004. Also common among the suits were allegations that Tommy Hilfiger Corp. issued financial statements that were allegedly materially misleading.

In the case filed by Milberg Weiss Bershad & Schulman, for example, it was charged that the “company engaged in an illegal scheme whereby it used padded commissions paid to non-U.S. subsidiaries as a vehicle for shifting millions of dollars in reportable revenue from high-to-low tax rate jurisdictions.” It added that as a result of the alleged scheme, the company’s “liability and provision for income taxes was materially understated, its net income was materially overstated, and the risk that the company would be forced to pay material fines and penalties was concealed from the investing public.”

The Milberg Weiss lawsuit further claimed that the financial statements issued by the company were “materially false and misleading, and inherently unreliable, because the defendants failed to disclose that tax evasion was a key element of the company’s business model.”

This story first appeared in the October 1, 2004 issue of WWD. Subscribe Today.

Not all of the lawsuits named Tommy Hilfiger Corp. as sole defendant, but designer Tommy Hilfiger is a named defendant in at least one lawsuit.

Of the court documents available, the names of former and current executives common to the lawsuits are: Silas K.F. Chou, co-chairman of the company from 1998 to 2001; Lawrence Stroll, co-chairman from 1998 to 2001; Joel Horowitz, executive chairman since February 2003 and former chief executive officer from 1994 to Aug. 2003; Joel Newman, who held various positions at the firm, most recently chief financial officer until July 29, 2004 when he retired; James P. Reilly, corporate controller; Joseph Scirocco, cfo and former treasurer, and David Dyer, ceo. At least one lawsuit named Benjamin M.T. Ng, cfo from 1998 to 2001, as a defendant.

Not all of the lawsuits were immediately available so it remains unclear from statements issued by law firms whether one or more might be working on behalf of the same shareholder. Law firms filing suits on behalf of investors include Milberg Weiss Bershad & Schulman, Wolf Popper, and Shiffrin & Barroway.

Meanwhile, shares of Tommy on Thursday sank to a new 52-week low in intraday trading — $9.40 — before closing at $9.87, down 6 cents, on the New York Stock Exchange. Thursday’s trading volume was 1.7 million shares, versus an average of 565,402 shares.

Investors are still digesting the information disclosed last Friday after the market closed that Tommy Hilfiger U.S.A. is providing investigators with documents dating to 1990. The company said it is cooperating with authorities. The U.S. Attorney’s office in Manhattan declined comment on the nature of its investigation.

Tommy Hilfiger U.S.A. said last week that the commission rate was paid for services that included product development, sourcing, production scheduling and quality control functions. It declined to further elaborate on the details.

When trading resumed on Monday, investors sent shares of the stock plunging 21.8 percent as they began digesting the speculation of several Wall Street analysts that taxation issues were behind the probe.

That’s because even though buying agency commissions on an intercompany basis are not inappropriate, they could be suspect if the rate is higher than usual. The company that pays the commission is usually based in a country that has a higher tax rate, and reduced profits means lower taxes. While the receiving firm now has higher profits, it is also typically in a country that has a lower tax rate. Usually, the result is greater profits for the parent company on a consolidated basis.

One analyst, Lizabeth Dunn of Prudential Equity Group, in a note Sunday wrote, “We believe the investigators are looking into whether [Hilfiger] has been shifting around income to avoid paying taxes. It is difficult to know the magnitude of the potential liability, but our estimate is more than $100 million.”

One institutional investor, who requested anonymity, said based on the number of shares traded between Monday through Wednesday — 20 million — it is “likely that the stock is nearing close to its bottom, although it still could drop some more. The problem is that there’s no information about what’s going on, or what the investigation is about, so the problem is not analyzable. When there’s this much uncertainty, investors these days sell immediately at any cost. What’s also spooking the market is the criminal aspect and not knowing when the matter will get resolved.”

The fund manager, who held a position last week, but declined to state whether he’s sold any shares this week, said the sell-off is not unlike what’s been going on in the stock market in the last few years, mostly due to increased activity by New York State attorney general Eliot Spitzer and an intensified focus by the U.S. Attorney’s office in Manhattan in a push to “wring out the dishonesty” in the system involving corporate securities matters.

He added that in a “perverse way, it might be good for the Tommy brand if consumers decide to rally around the company. Look at how some have supported Martha Stewart.”

Meanwhile, an executive at an apparel firm in New York observed, “I was shocked at the news when I heard it on Monday. Paying a commission rate to a buying office that happens to be a related company is done all the time in this industry.”

Generally, the rate paid is between 5-to-8 percent of the cost of the unit sold by the factory. Just how much more did Tommy Hilfiger U.S.A. pay remains a mystery.